The intent of the Compensation44 Category is for organizations to offer wages that are equitable within all job classifications and that allow all employees to support a healthy life for themselves and their families.
A living wage covers essential costs and provides a sufficient standard of living for individuals and families within their local communities. Living wages impact numerous human rights–the right to an adequate standard of living (including food, shelter, clothing, and living conditions), the right to rest, the right to protection of the family, the right to health, and more.45 A true living wage is necessary to help raise families out of poverty and contributes to physical, social, and emotional well-being by providing financial stability. Organizations often base wage decisions on the market rate for certain jobs or populations, but simply using market rates can perpetuate inequity, as these rates are built on decades of wage discrimination.46 By making an active effort to provide and sustain context-specific living wages, employers meaningfully contribute to improving the lives and well-being of their employees and, by extension, communities and our societies as a whole.
A large disparity persists between the compensation given to many senior executives, such as CEOs, and the compensation given to other workers in the same organization. Within organizations, roles at all levels are valuable and necessary and deserve to be paid equitable living wages that reflect this. The overcompensation of these senior executives has been increasing significantly over the last 40 years. In 2021, CEO pay rose 18.2%, faster than the U.S. inflation rate of 7.1%; during this same period, U.S. workers’ wages fell behind inflation, with worker wages rising only 4.7%.47 While the disparity may not be as extreme within the building industry, the principle of striving for greater equity throughout the pay scale remains.
Pay inequity particularly affects traditionally underestimated and marginalized groups, including people who identify as women, Black, Latinx, or a combination of these identities.48 In the U.S., while women working full-time year-round typically earn 84 cents for every dollar men earn, this gap expands to 69 cents for Black women, 59 cents for Native women, and 57 cents for Latinas.49 Similar trends can also be seen at a global scale, with the International Labour Organization (ILO) reporting that women earn an average of 77 cents for every dollar men earn for work of equal value.50
Pay equity does not mean that everyone is paid the same; compensation based on differences in experience, responsibility, and risk may result in justifiable, reasonable, and scalable differences in pay. The value contributed by all employees can and should be appropriately and equitably recognized without creating and perpetuating disparities. With equitable compensation, the basis of compensation for employees from historically underrecognized groups is the same as that for majority groups. Committing to pay equity reveals and eliminates any patterns that undervalue work traditionally performed by underrecognized groups and other gender-, race-, and ethnicity-based wage discrimination.
Furthermore, paying employees equitably can help attract and retain talent, and prevent internal strife, low morale, and turnover if employees discover they are being paid a lower wage or salary for performing the same role. Three in five employees will not apply to work at companies with an equity pay gap,51 and 76% of employees would consider seeking new employment if they discovered an unfair gender pay gap.52
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44 Throughout the Just program, “compensation” refers to monetary payment received by an employee as a salary or wages. This term is primarily used in North America and is also known as “remuneration” in other contexts.
45 Business & Human Rights Navigator. (n.d.). Living Wage. United Nations Global Compact. Retrieved April 4, 2024, from https://bhr-navigator.unglobalcompact.org/issues/living-wage/.
46 Leondar-Wright, B. & Lynge, A. (2019). Staffing the Mission: Improving Jobs in the Nonprofit Sector. Class Action. Retrieved January 13, 2023, from https://search.issuelab.org/resource/staffing-the-mission-improving-jobs-in-the-nonprofit-sector.html.
47 American Federation of Labor and Congress of Industrial Organizations. (2022). Company Pay Ratios [Data set]. Retrieved January 31, 2023, from https://aflcio.org/paywatch/company-pay-ratios.
48 Collins, C., Asante-Muhammad, D., Hoxie, J., & Nieves, E. (2016). The Ever-Growing Gap. Institute for Policy Studies. Retrieved January 19, 2023, from https://ips-dc.org/report-ever-growing-gap/.
49 AAUW. (2024, February 22). Equal Pay Day Calendar. Retrieved April 3, 2024, from https://www.aauw.org/resources/article/equal-pay-day-calendar/.
50 International Labour Organization. (2016). Women at Work: Trends 2016. Retrieved April 3, 2024, from https://www.ilo.org/wcmsp5/groups/public/—-dgreports/—-dcomm/—-publ/documents/publication/wcms_457317.pdf.
51 Barnard-Bahn, A. (2020, November 3). How to Identify—and Fix—Pay Inequality at Your Company. Harvard Business Review. Retrieved February 13, 2023, from https://hbr.org/2020/11/how-to-identify-and-fix-pay-inequality-at-your-company.
52 Gonzales, M. (2022, May 11). Workers Expect Equal Pay, DE&I Policies from Employers. Society for Human Resource Management. Retrieved January 23, 2023, from https://www.shrm.org/resourcesandtools/hr-topics/behavioral-competencies/global-and-cultural-effectiveness/pages/workers-expect-equal-pay-dei-policies-from-employers.aspx.
